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Some Convenience Stores Taxing Tax Free Items

Snack foods are displayed Friday, Oct. 6, 2006 at a news stand in New York. Former President Bill Clinton and the American Heart Association announced a deal Friday with several major food companies to make school snacks healthier the latest assault on the nation's childhood obesity epidemic. (AP Photo/Mark Lennihan)(Credit: AP Graphics Bank)

NORTH TEXAS (CBSDFW.COM) – A CBS 11 investigation found some convenience stores overcharging customers by applying sales tax on snack items that should not have taxes attached to them.

When it comes to most snacks – peanuts, popcorn, potato chips – customers have a right to partake without giving the state of Texas a part of their pocketbook. Under state law, most food items are tax free, but stores in Dallas, Plano, Garland, Richardson and Colleyville charged tax anyway.

Cliff, a Plano resident who did not wish to use his full name, noticed he was routinely paying seven cents too much for snack cookies in at least two dozen convenience stores in the Dallas, Fort Worth area.

Texas state law mandates that convenience stores that don’t have an attached restaurant or a place to sit down inside cannot charge sales tax on most foods. This includes many snacks, cooking supplies, condiments, dairy products, produce and more.

Many clerks said they get confused because not all food is tax-free. Sometimes, their registers are programmed wrong and automatically add tax to these items.

“Multiply seven cents by all the non-taxable items they’re selling in these stores all over the state of Texas, and you’re talking millions of dollars in the state alone,” Cliff said.

But storeowners and employees said that when tax is charged, the state still gets the money.

“Customers think about this money is going into our pocket, but this money is not going to our pocket,” one owner said. “Like any tax, it goes to the state.”

R.J. DeSilva, a spokesman for the Texas Comptroller’s Office, said the state still has incentive to regulate the application of sales tax, even if it ends up bringing extra money in.

“It’s a huge incentive because it’s playing by the rules in all different types of taxes,” he said. “It’s also playing a role in consumer protection.”

DeSilva said the state audits convenience stores to ensure consumers are protected from paying extra taxes. He said the office depends on customers who report this problem to the state and request refunds locally, which is what Cliff did at a Plano location.

He bought his typically $.79 cookies, but the clerk charged him $.86. In this case, there was no mention on the receipt that the extra money was for taxes.

When he went back into the store, the owner said it was a mistake and that the item was scanned wrong. He quickly reimbursed Cliff for the sales tax.

The state comptroller’s office has asked for copies of all receipts from this CBS 11 investigation and promised to audit the stores to find out where the money is going.

So, how do you know what should be taxed and what shouldn’t? It’s a bit confusing sometimes: For example, sodas are taxable, but bottled water is not, unless it’s flavored water. Juices that contain less than 50 percent of real fruit or vegetables are taxable. One ice cream bar is taxable, but a package of two or more is not.